Beware the pitfalls of trying to avoid care fees in later life

AMID a growing, ageing population in Yorkshire, more and more people are spending their later life living in nursing and residential homes.

But with this comes a significant expense – nationally the average cost for nursing home care is now £800 a week – and no shortage of creative ideas about how to avoid paying such care fees.

But be warned – one of the so-called avoidance tricks in particular can land you in hot water.

And that is the belief that if you sign over your home to your children, you can dodge paying any care fees at all, as a local council would not be able to include it when looking at all your assets and working out whether to provide help with care costs.

You need to be very cautious about doing anything which could be seen by a local authority as an artificial device to avoid care fees, as this can go badly wrong.

Taking professional legal advice is an absolute must before even contemplating a change of this magnitude.

That’s because there is also other measures that you can take would be less open to challenge, which can help reduce the impact of future care fees.

Councils are increasingly aware that families are trying to avoid costs by transferring their home into the names of their children, and have powers to take account of the value of your home – even if it has been signed over to your children.

The rules are complex, but if the transaction appeared to have been purely or mainly to mitigate care costs, then councils would be within their rights to include the value of the house in any case.

One aspect over which they would cast a forensic eye is whether future care costs were “foreseeable” – a house transfer just before someone went into care would look very suspicious and trigger a potential investigation.

Councils are trained to look-out for anything that looks like you have artificially ‘deprived’ yourself of capital just to avoid care fees, and Age UK have produced a helpful note on what this means in practice here.

 

And as former Pension Minister Steve Webb explains in his latest Daily Mail column here https://www.dailymail.co.uk/money/pensions/article-7116867/Should-house-children-avoid-care-fees.html there are other downsides to consider.

 

For example, if you do give your children ownership of your home, this could cause problems if, for example, you and your wife decide you want to downsize but your children disagree with your wishes.

There could also be problems if you fall out, or if a child divorces their partner who as a result ends up with a stake in your property – you could even find your home sold from under you.

One alternative that may be worth pursuing, however, is for a couple who own a home to do so as “tenants in common”. This paves the way for a client’s will to be written to include a trust for his or her “half share” in the house, incorporating a “right to reside” clause within it.

When the first partner sadly dies, it simply allows the surviving partner to continue living there without owning that half of the property.

This means that if the second partner subsequently needed to go into a care home, their own assets would only be half the value of the house rather than the full value.

Again, a decision like this needs to be made with expert legal advice as it has knock-on effects for things like what you put in your will – such as who gets your half of the house, and ensuring that the surviving spouse retains the legal right to live in the house after your death.

Should you have any questions or concerns regarding wills, trusts and probate, or any other inheritance-related issues, please do not hesitate to contact this article’s author, solicitor Jessica Savage, a fully qualified member of the Society of Trusts and Estate Practitioners (STEP), here at Milners on 0113 245 0852 or email us at hello@milnerslaw.

 

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